What Happens When a Rapidly Segregating School Loses its Poverty Aid? Or: Making Mincemeat Out of Equity

Travel back with me to 2009, when Minneapolis Public Schools was in the process of trying to quell an insurrection of wealthy white parents. With the exception of the crunchy-granola set, which has long maintained an enrollment stronghold at South High School and doesn’t have enough money to count as wealthy anyhow, the chattering classes wanted to send their children to Southwest High.

But even with a future expansion under discussion Southwest could only hold so many teenage bodies. Kids literally were sitting in window wells in some classes. Lunch was often eaten in the hall. On the floor in shifts.

You remember this, right? The battle of the entitled reached its apex with a raging debate about higher-level math. Southwest, parents actually howled at the board, had all the special math teachers and Washburn had none. Seriously, families knew the names of individual math teachers. It was like fantasy football, but with licensure status instead of career stats.

Parents who couldn’t so much as do long division held forth at parties: Who was the district kidding insisting students at both schools would get a world-class education?

Back then Washburn had 872 students. Fewer than one-fourth were white. Today, after a decade of changes to attendance boundaries and the roster of “feeder” schools, Washburn has twice as many students. In 2017, 872 of its 1,642 students are white, or 53 percent.

This makes Washburn the least impoverished high school in the district, with 37.6 percent of its student body qualifying for subsidized meals, vs. 39.4 percent at Southwest. Hold onto this information for a second.

The federal government has long provided schools with pots of money intended to offset the challenges of educating concentrations of kids in poverty. If a school has more than a particular percentage of students eligible for free and reduced-price lunches, it gets these Title 1 funds. Most of the time that money can be spent to benefit the whole school.

Except it doesn’t always. There’s always been what the number-crunchers call “seepage,” where predominantly wealthy schools are buoyed by the funds. For several years, Minneapolis School Board members have been talking about making the process more equitable – of making sure those dollars end up in the schools serving the kids who need the aid.

As a part of this, MPS decided to change the eligibility threshold from 35 percent to 40 percent. And so next year Washburn joins the list of schools that will no longer receive Title 1 funds. If you’re paying attention to the groundswell of middle- and upper-class opposition to next year’s proposed MPS budget, you will instantly understand that this is essentially a $417,000 squirt of kerosene on a fire lit by the Washburn community over the $1.6 million, or 13 percent, cuts it is currently expected to make for next year.

That’s a crazy big cut – no question. But one long telegraphed. And long postponed, despite year after year of big budget deficits. Because cuts are painful, no matter who is facing them, and parents with muscle to flex do so. And when they are the type of parents who treat getting their kids into Calculus IV and Linear Algebra as a contact sport, well, seepage has a funny way of occurring.

Washburn’s parent population has mobilized en masse, marching and descending on district headquarters and doing a remarkably good job getting time in front of TV reporting crews, who would no more know what Title 1 funding is than they would how to levitate. They have dubbed the campaign “Equity for Washburn.”

And now in a repeat of a performance that’s happened over and over in recent years, six of the nine school board members are talking about creating a “bridge” budget, to spare the most painful cuts in the hope that three things happen: That next year Minneapolis voters agree to an enormous levy (which they will); that marketing will entice students back to the district (which it won’t); and that the legislature will ride to the rescue (which will happen a little, but it’ll be more like air-dropping in snacks than making up for structural budget problems decades in the making).

They want to spend more of the district’s rainy-day reserve fund, which over the last seven years has dwindled from $122 million to $42 million. Which might sound like a lot but would last mere weeks in the event of a catastrophe such as a government shutdown. Indeed the “bridge” under discussion could throw the district into a legal status known as statutory operating debt, which is a kind of debt spiral about which state law sets out strict parameters.

(Note from an alert reader: This year’s “budget balancing” shift will deplete that $42 million by $16.5 million, so we’re actually talking about drawing the reserves down to about $19 million.)

All of which is possibly the longest-winded set-up in blogging history to a post about an exchange that happened five and a half hours into the recent school board meeting. Long after most folks – reporters? lolz, we haven’t had those at board meetings for a while — had gone home.

Board member Rebecca Gagnon, who was chair of the board’s finance committee for much of the time in question, had proposed digging into the reserves one more time in the hope that next year there will be more revenue.

After saying he had called a friend who worked in finance in another district who explained statutory operating debt to him, board member Bob Walser said he wanted to introduce a resolution calling on district staff to provide the board with information on where MPS sits with regard to that status and projecting how the numbers would play out over the next two years.

Very quietly and at the prompting of the board chair, Superintendent Ed Graff noted he had provided those numbers in an email to the board the week before.

Unchastened, Walser held forth about the section of the state Department of Education’s website that covers statutory operating debt: “It raises the things you are talking about, things like having a financial plan and having good financial reporting…. The board needs good information to understand where we stand.”

Machiavelli’s reincarnation, board member Siad Ali attempted to re-make the point: “Director Walser, I see that you want superintendent to report to the board the financial condition of the district.”

Walser asks Ali to repeat himself. Ali obliges. Walser still seems oblivious to what he’s said. At which point the superintendent asks district Chief Financial Officer Ibrahima Diop to address the question. Helpful background: Diop is widely regarded as a genius.

At 5:35 Diop adjusts the mic, purses his lips and launches. I’ve left out a few extraneous bits, but what follows is an otherwise faithful transcript.

I’m sitting here and I looking around and I am wondering where I am. Because I am entering my third year. When I started, Director Gagnon was the chair of the Finance Committee and we had numerous discussions about where we were and how we got there. The first year I found investments that the district made, that there was no one at that time who had made the investments who was still there. On top of that there were revenues that the district had for the previous year unreported.

From 2010 or 2012 to now you look at the fund and you see it coming down, coming down, except for two years, ’15 and ’16. Those are the years that I came here and it went up and went up. And if that had not happened, last year would have been a disaster because you would not have found money to think of talking about today in terms of fund balance.

Director Walser, the questions you ask of someone else you could have asked me here. I would have given you the same info. Because I report that to you. If you look at the reports I give to you it says restricted and unrestricted. And the information you asked the superintendent for, you already have it.

When it comes to financial reporting and school finance, this is not my first year. There is no one sitting on that board right now who has more knowledge or training than me sitting there today. Not only did I go to school for it, I’ve been doing it for more than 20 years, and in a school district larger than this one. So this is not a game to me. This is a matter of passion. I am passionate about this.

The policy is the policy the board came up with. Not me, not the administration. The board said, ‘We want reserves to be between 8 and 15 percent.’ Where did I find it? The first week I was here I sat in the back and heard the fund balance was at 5.27 percent. At the end of the year we – not me, the brilliant ream that works with me, that know how to work in finance and know what they are doing – we went to work and brought the fund balance from 5.27 to 8.9.

So the clarification I want to provide you with today is this. Statutory operating debt — that is not the issue to me. The issue to me is do we have a policy or don’t we? If we do have a policy that says we have to be between 8 and 15 percent, let’s respect it. If not, let’s abandon it and not have a policy on fund balance. But if we do have a policy and we’re not kidding ourselves, then let’s follow it.

I am CFO and I know what I am doing and if what I am telling you is not enough… (Diop spreads his palms and shrugs.)

The school district’s finances have not been stable for many years. And the reason for it? We all know it. Spending above our means. Why? Because somebody complained here and we say, ‘Let’s do this,’ and then somebody complains there and we ask the finance team to balance the budget.

The budget we put forth now is the first one in eight to 10 years that has been structurally balanced. So going back to the fund balance to balance it means we are going back to business as usual. The budget is really not balanced. We are going to the fund balance to close the gap.

When Diop finished talking, the sound of one person applauding loudly from the back of the meeting room could be heard.


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